By Grant Mya
Before corporate medicine controlled by large healthcare groups, medical residents looked forward to opening private practices. More than one clinician looked forward to returning home to practice in the communities they grew up in. How things have changed in recent times. Opening a private medical practice is harder than ever. What’s more, fewer doctors are doing it.
To be fair, medical residents have a lot more options these days. They can work as hospitalists or staff physicians in a group practice. They can make full-time locum tenens work an actual career. And of course, the advantages of working for someone else include not having to take responsibility for a business. But the biggest issue could be money.
Starting a Practice Is Not Cheap
Starting a private medical practice in 2022 is complicated. There is a lot more to it than there was just 50 years ago. It is so complex that most new doctors who decide to go the private practice route start working on establishing their practices during the early stages of residency. It can take 10 to 12 months to get a practice up and running.
It goes without saying that the venture is also expensive. To begin with, a solo practice owner has to register their business with the state. There are fees attached to licenses, permits, etc. And that is just the start. Clinicians also have to pay for medical malpractice insurance, an endeavor that could cost tens of thousands of dollars per year.
Other expenses include:
- office space and utilities
- office and exam room furniture
- medical and office equipment
- legal and accounting services
- technology services and software
- sales and marketing.
Clinicians can easily spend six figures just to get a solo practice up and running. After that, there are monthly expenses along with recurring responsibilities.
Hiring and Retention
With the skeleton of a solo practice in place, the clinician has to hire staff. There are lots of ways to do this. The cheapest way is to just post jobs on a healthcare job board. But that means going through each application and conducting each interview personally. Clinicians not interested in also being HR experts can work with recruiters instead.
Recruiters post on job boards as well. But they also utilize services like physician databases from iMedical Data to actually go out and find candidates instead of waiting for those people to come to them. This is a more effective and efficient way to hire. But again, it costs money. Recruiters do not provide their services for free.
Once team members are hired, they have to be paid. Clinicians have to keep enough money in reserve to cover payroll while they build their businesses. They have to be prepared for the fact that they could be well into the second or third month of operation before they get their first reimbursements from health insurance companies. Meanwhile, they are incurring costs.
We Run an Expensive System
The challenges of opening a new solo practice boil down to the fact that we run an expensive system here in the U.S. Everything costs more because our standard of living is so high. Unfortunately, the high costs are discouraging new doctors from choosing solo practice. They are more content to be healthcare employees of companies that have a lot more money to spend.
Will we ever see a return to the private practice model? Probably not. Unless something changes, starting a private practice will only get more expensive. That will not make it any easier for a doctor to remain independent.
